There are many examples of situations and contexts in which buyers and sellers may enjoy advantages by utilizing an electronic trading system. As one of numerous examples of such contexts, buyers and sellers may wish to transact with one another even though they may have never met each other, or are unfamiliar with the reputations of each other's businesses. This is frequently the case, for example, in international trade, where the buyer and the seller are often strangers separated by large distances and international borders. In such situations, buyers and sellers may be understandably wary of transacting with each other. Sellers would be more comfortable receiving payment prior to the shipment of their goods, but buyers would be more comfortable receiving seller's goods prior to making payment. Without confidence in the opposing party, a buyer or seller may be reluctant or even unwilling to enter into a transaction.
For these and other reasons, a traditional paper system has developed, involving the participation of financial institutions, shippers, and use of such documents as the Letter of Credit (LOC) and the Bill of Lading (BOL). In such a system, a buyer has the buyer's bank issue a LOC guaranteeing to the seller's bank that payment will be made so long as specified agreed to terms such as shipment content, date, etc. are satisfied. In turn, the seller's bank guarantees payment to the seller so long as the specified terms are met.
Once the seller has complied with the specified terms, the seller must prove such to the seller's bank. This is often done by presenting a BOL to the seller's bank, which the seller received from the shipper upon presentation of the goods to the shipper. Other documents might also be required for presentation. Upon presenting appropriate documentation, the seller is paid by the seller's bank. The seller's bank is then reimbursed by the buyer's bank and the seller's bank gives the BOL to the buyer's bank. The buyer must then pay the buyer's bank in order to obtain the BOL from the buyer's bank. The buyer may then obtain the goods by presenting the BOL to the shipper upon delivery. The above-described traditional paper system, however, is burdened with various inefficiencies and may be prone to fraud, and represents one of many contexts in which an electronic trading system would be desirable which avoids disadvantages and inefficiencies of traditional paper trading systems.
Electronic systems for facilitating various aspects of trade and transactions are known in the art. Patent Cooperation Treaty international application, International Publication No. WO 00/48053, having inventors Mallon et al., published on Aug. 17, 2000, is entitled, “Commercial Transaction Management System and Method,” and discloses a method and system for providing to commercial market participants a dedicated data processor for consolidating and expediting a financial settlement system. Upon placement of a commercial transaction order, various transaction documents such as the purchase order, confirmation order, invoice and bill of lading are transmitted to the data processor in electronic format and stored in a database. Following delivery of the goods or services to the buyer, the carrier generates a proof of delivery document which is thereafter forwarded to the data processor. The various transaction information is then audited and reconciled by the data processor, for purposed including facilitating early resolution of possible exceptions or problems which may prevent timely payment.
Patent Cooperation Treaty international application, International Publication No. WO 00/55774, having inventors Barry et al. (hereinafter, “Barry et al.”), published on Sep. 21, 2000, is entitled, “Transaction Support System,” and discloses a centralized database system for supporting transactions in property. The central database is accessed over a public network, such as the Internet, and forms a title registry recording the entitlements of the users, to allow performance of prescribed actions in relation to electronically related records. Barry et al. further discloses a method and system wherein the collection of transaction information may be processed to provide scoring of risk to a financial institution, such risk being calculated based upon individual transactions as well as the transaction history between the buyer and the seller.
Patent Cooperation Treaty international application, International Publication No. WO 01/41096, having inventors Katsman et al., published on Jun. 7, 2001, is entitled, “Secure Payment and Trade Management System,” and relates to a system which recognizes and reserves funds against a credit account established by a buyer with a financial institution in the form of a credit card or bank line of credit used to issue an electronic documentary credit.
U.S. Pat. No. 6,167,385 issued on Dec. 26, 2000 to Hartley-Urquhart, entitled, “Supply Chain Financing System and Method,” relates to financing a supply of goods from a supplier to a buyer, in which the buyer has a lower cost of funds than the supplier. The buyer generates a purchase order for the goods which is forwarded to the supplier who in turn ships the goods to the buyer. The supplier sends an invoice to the buyer and invoice data is stored in a database. The financing institution electronically accesses the database to retrieve daily invoices. The financial institution then calculates the financing applicable to the shipped goods and forwards payment to the supplier. Upon maturity of the financing, the buyer settles with the financial institution by remitting the gross proceeds.
Patent Cooperation Treaty international application, International Publication No. WO 00/70519, having inventors Falic et al. and published on Nov. 23, 2000 is entitled, “Network Accessible Quotation and Shipping System,” and discloses a transportation logistics system. The system is intended to provide to vendors or shoppers, at the time of a purchase, a total global delivered cost quote for shipping a product between locations. The system is accessible over a circuit switched network, such as the Internet, and includes a Web server and a proprietary database. A total delivered cost engine retrieves the necessary information for the database, given the requestor input, and performs the necessary calculations. The total delivered cost quote, which includes any applicable inland origin freight, inland destination freight, air freight, ocean freight, insurance, duties, taxes custom clearance fee, import fee, or service fee is presented to the requestor.
While the above-described prior art systems are of utility in facilitating certain aspects of certain transactions in certain contexts, none provide a truly comprehensive, full-featured electronic trading system. Various qualities can be envisioned as ideally being present in an electronic trading system. The system ideally would be able to facilitate transactions from start through finish, and be able to access and utilize a database of trade information for various purposes, which database might contain information relating to numerous transactions between numerous sellers and buyers. The system ideally would allow as many trade-related features and functions as possible, for the convenience and efficiency of its users. The system would ideally integrate or allow access to ancillary service providers such as lenders, funders, guarantors, insurers, and shippers. Finally, the system would ideally work in an integrated fashion, permitting various synergies resulting from combinations of features.
Various particular features of a comprehensive trade system can be envisioned. A system that would allow a seller and a buyer to amend a previously agreed-to purchase order agreement would be desirable, to permit the buyer and the seller greater flexibility in the transaction. Such amendments would ideally be carried over to later aspects of the transaction. A system is further desirable that would be capable of monitoring credit exposures of buyers utilizing transaction information stored by the system, and that would utilize buyer credit exposure information for purposes including facilitation providing buyer credit assurance to sellers. The system would further ideally have access to existing buyer transactions to be able to project future credit exposure. The system would further ideally facilitate and utilize its stored trade information in facilitating sellers obtaining financing, for example, to produce goods to comply with a purchase order agreement. The system would further ideally facilitate and utilize its stored trade information in facilitating sellers obtaining advance payment on a purchase order agreement. For example, the seller might obtain advance payment from a lender who might then become entitled to payment from the buyer. The system would further ideally facilitate and utilize its stored trade information in facilitating providing cargo insurance on goods shipped in accordance with transactions facilitated by the system.